Accounting Treatment of KKC (Krishi Kalyan Cess). Check Accounting Entries for Krishi Kalyan Cess. Check Journal Entries and Adjustments related to KKC (Krishi Kalyan Cess). In this article we provide complete details for Accounting Entries of KKC with Empales and Various Case Laws. Now Scroll down below n check more details for “Accounting Treatment of KKC (Krishi Kalyan Cess)”
Accounting Treatment: Now we will discuss the accounting entries under the following possible heads where service tax Is charged under different value in the books of B Limited.
Case A. Where service tax is charge at full rate on 100% bill value by A Ltd. Example – Erection service, consulting engineering service. etc. Output Invoices is also raised by B Ltd at full rate on 100%
B. Where service tax is charged at full rate on 40% value on bill amount by A Ltd to B Ltd . Example, Work Contracts for originals works. Output Invoices raises by B Limited on full value / abated value
C. Where service tax is charged at full rate on 70% value on bill amount by A Ltd to B Ltd. Example, Work Contracts for other than original works ( Annual Maintenance service contract)
D. Where service tax is charged at full rate on 30% value of service. Example, Transport of goods by road services (GTA)
E. Service tax calculated on 100% value but payable by the recipient of service. Example, Legal Services
F. Service Tax calculated on abated value (40%) and 50% ST to be charged by the provider of services and balance 50% on ST to be paid by recipient of service. Example Work contract service provided by a non corporate entity to B Ltd
G. Service tax is calculated under Reverse charge on 40% value and recipient has to pay 100% of Service tax. Example, Rent a cab service provided by an non corporate entity to B Ltd.
Case A : Let us take an example. Value of input service received by B Ltd from A Ltd is Rs 10000. ST rate 14%. SBC-0.5%. KKC – 0.5%. B Ltd raises Output Invoices for Rs 20000. rate of tax is same.
|Books of B Ltd|
|i) For booking of Expenses||Dr (Rs)||Cr (Rs)|
|Expense A/C Dr||10000||Expenses booked|
|Service Tax A/C Dr||1400||ST amount 14% on 100% value|
|SBC A/C Dr||50||SBC 0.5% on 100% value|
|KKC A/C Dr||50||KKC o.5% on 100% value|
|To A Ltd A/C||11500||Gross Bill Value|
|ii) For booking of Income|
|Customer A/C Dr||23000||Gross Bill Value|
|To Sales A/C||20000||Income booked|
|To ST Payable A/C||2800||ST liability on 100% value at 14%|
|To SBC Payable A/C||100||SBC payable.0.5% on 100% value|
|To KKC Payable A/C||100||KKC Payable. 0.5% on 100% Value|
|iii) Discharge of KKC Output Liability.|
|Firstly, KKC input credit of Rs 50 will be utilized to pay the output liability|
|and the balance amount of Rs 50 ( 100-50) will be paid through cash. Normally a separate|
|account is created for such adjustment and payment of KKC. Let KKC Adjustment A/C|
|is opened and following entries will be made for adjustment and payment|
|iii)(a) Transfer of KKC output Liability|
|KKC Payable A/C DR||100|
|To KKC adjustment A/C||100|
|iii)(b) Transfer of KKC input credit|
|KKC adjustment A/C||50|
|To KKC A/C Dr||50|
|iii) ( c )Payment of balance amount in cash|
|KKC adjustment A/C Dr||50|
|To Bank A/c||50|
Other Important Points:
In all the situations, KKC adjustments will be like this and will not be discussed in subsequent discussions of all other cases.
There should not be ‘Credit’ balance in KKC adjustment account at the month end. Cr balance represents the undercharged liability and should be discharged immediately
As Cenvat Credit is not available for SBC, SBC liability to be discharged in cash and SBC on input to be charged to Revenue
Case B and F : Consider the previous example where original works provided by A Ltd / Mr A ( Non corporate entity)
Case C : All are same like above. ST ,SBC and KKC to be calculated on 70% value
Case D : GTA Service : In this case , Recipient of the service is to bear the Service Tax under Reverse Charge. Value for this purpose is 30% on the Invoice Value. Status ( corporate or non corporate) of the service provided is immaterial.
Example : A Ltd provide the GTA service to B Ltd .Value of service is Rs 100000. A Ltd will raise a bill for Rs 100000 and the Service tax on 30% value to be borne by B Ltd. Journal Entry will be as follows.
Case E : Service tax calculated on 100% value but payable by the recipient of service. Example, Legal Services : Journal entries will be same as case D above. ST, SBC and KKC will be calculated on 100% value
Case F : Service tax is calculated under Reverse charge on 40% value and recipient has to pay 100% of Service tax : Journal entries will be same as case D above. ST, SBC and KKC will be calculated on 40% value.
- Levy of Krishi Kalyan Cess (KKC) under Service Tax
- Krishi kalyan cess & Infrastructure cess With Summar
- Indirect Tax System in India – List of Taxes Under Indirect tax
- Interest Provisions Under Service Tax Law
- Service Tax and New Service Tax Rate @ 14.5%
- Procedure for Online E- Registration of Service-Tax
- Service-Tax Reverse charge mechanism – Complete Details
If you have any query regarding “Accounting Treatment of KKC (Krishi Kalyan Cess)” then please tell us via below comment box…